Bolivia's Water War Victory

by Jim Schultz

Earth Island Journal, Autumn 2000

At 10am, President Hugo Banzer places Bolivia under martial
law. This drastic move concludes a week of protests, general strikes
and transportation blockages that have jerked the country to a
virtual standstill, and follows the surprise announcement of government
concession to protesters' demands to break a $200 million contract
selling Cochabamba's public water system to foreign investors.

The water system is currently controlled by Aguas del Tunari,
a consortium led by London-based International Water Limited (IWL),
which is itself jointly owned by the Italian utility Edison and
US-based Bechtel Enterprise Holdings. Upon purchasing the water
system, the consortium immediately raised rates by up to 35 percent.
That untenable hike sparked the protests.

In January, "Cochabambinos" staged strikes and blocked
transit, effectively shutting their city down for four straight
days. The Bolivian government then promised to lower rates, but
broke that promise within weeks. On February 4, when thousands
tried to march in peaceful protest, President Banzer had police
hammer protesters with two days of tear gas that the 175 people
injured and two youths blinded.

Ninety percent of Cochabamba's citizens believed it was time
for Bechtel's subsidiary to return the water system to public
control, according to results of a 60,000-person survey conducted
in March. But it seems that the government has come to Bechtel's
rescue, insisting the company remain in Bolivia. President Banzer,
who ruled Bolivia as a dictator from 1971-78, has suspended almost
all civil rights, banning gatherings of more than four people,
and severely limiting freedom of the press. "We see it as
our obligation, in the common best interest, to decree a state
of emergency to protect law and order," Banzer trumpeted.

Local radio stations have been closed or taken over by military.
News paper reporters have been arrested. Police conducted nighttime
raids searching homes for water protesters and arresting as many
as 20 people.

The local police chief has been installed as state governor.
The "emergency government" now consists of a president
(Hugo Banzer), a governor (Walter Cespedes) and a mayor (Manfred
Reyes Villa), each of whom is a graduate of the notorious School
of the Americas in Ft. Benning, Georgia (infamous for training
foreign military personnel in terror and assassination techniques).

Rural blockades erected by farmers have cut some cities off
from food and transportation. Large crowds of angry residents
armed with sticks and rocks are massing in the city centers, where
confrontations with military and police escalate.

Tear gas has engulfed thousands of demonstrators in downtown
Cochabamba, while a large military operation is mobilizing to
clear the highways in five of the nation's nine provinces.

All this puts Cochabamba on the front-line in the battle against
a globalization of water resources. The Coordiadora de Defense
de Aguay la Vida (CDAV, Coalition in Defense of Water and Life),
a broad-based collaborative including environmental groups, economists,
lawyers, labor unions and local neighborhood organizations, spearheads
the campaign to prevent loss of local control over water systems.
Its leaders either have been arrested or driven underground.

Bechtel Crumbles, Flees Bolivia

It has been one hell of a week here. The CDAV, led by 45-year-old
machinist Oscar Olivera, has kicked the Bechtel Corporation out
of Bolivia! (I'd like to see a consumer revolt in my home state
of California match that!) The people stood up to President Banzer
and martial law. I am in awe at what we were able to accomplish
together, all across the globe, using the Internet. Hacking away
at this keyboard in a corner of the Andes that few people in other
places ever think about, we sent the news of what happened here
out to many thousands of people around the world. In a matter
of hours, we transformed the Bechtel Corporation from "the
invisible hand behind the scenes" to a corporation right
smack on the hot seat.

Thousands of emails streaming into its San Francisco headquarters
from Mexico, England, Canada, Iceland, India, Pakistan, Egypt,
Nepal, Australia and the US forced the corporate behemoth to respond.
Bechtel's equivocating public relations statement generated caustic
headlines in Bolivia and caused the Bolivian government to state
definitively that Bechtel's water company isn't coming back.

Bechtel is a global giant, posting more than $12.6 billion
in revenue in 1998 - $2.4 billion on Latin American projects alone.
IWL is its arm through which it pursues water-privatization schemes
such as Aguas dei Tunari. Bechtel, Inc., has trumpeted that IWL
"with its partners, is presently providing water and wastewater
services to nearly six million 'customers in the Philippines,
Australia, Scotland, and Bolivia and completing negotiations on
agreements in India, Poland, and Scotland for facilities that
will serve an additional one million customers."

The World Bank's Role

On Wednesday, a Finnish news reporter forced World Bank Director
James Wolfensohn to comment directly on the Bolivia water protests.
Wolfensohn argued that giving public services away leads inevitably
to waste, and said that countries like Bolivia need to have a
"a proper system of charging." The former Wall Street
financier claimed Bank-backed privatization of the Cochabamba
water system was by no means directed against the poor. In La
Paz, Bolivia, protest leader Oscar Olivera responded, "In
Mr. Wolfensohn's view, requiring families who earn $100 per month
to pay $20 for water may be 'a proper system of charging,' but
the thousands of people who filled the streets and shut down Cochabamba
last week apparently felt otherwise."

In a June, 1999 report, the World Bank stated, "No subsidies
should be given to ameliorate the increase in water tariffs in
Cochabamba," arguing that all water users including the very
poor should receive bills reflecting the full cost of a proposed
expansion of the local water system. (Water-users in wealthy suburbs
surrounding Washington, DC, home to many World Bank economists,
pay approximately $17 per month for water, less than what many
Colombians were asked to pay after water was privatized in one
of South America's poorest countries.)

Olivera continued, "I'd like to meet with Mr. Wolfensohn
to educate him on how privatization has been a direct attack on
Bolivia's poor. Families with monthly incomes of around $100 have
seen their water bills jump to $20 per month - more than they
spend on food. I'd like to invite Mr. Wolfensohn to come to Cochabamba
and see the reality he apparently can't; see from his office in
Washington, DC."

The past week's uprisings in Bolivia provide a leading example
of the abuses of international economic policies, including the
privatizing public enterprises such as drinking water.

Bechtel Blames "Narcotraffickers"

In 1999, the Bolivian government, under heavy pressure from
the World Bank, sold Cochabamba's public water system to Bechtel's
Aguas del Tunan. Details of the deal remain secret, with Bechtel
claiming the numbers constitute "intellectual property"

That Bechtel's subsidiary was intent on obtaining maxi mum
returns on its investment, as quickly as possible, is clear. Within
weeks of hoisting their corporate flag over local water facilities,
Aguas del Tunari hit up water-users with rate hikes of double
and more. Families earning a minimum wage of less than $100 per
month were dunned for $20 and more and threatened with having
the water shut off. Tanya Paredes, a mother of five who supports
her family as a clothes-knitter, was hit with an increase of $15
per month - equal to her family's entire food budget for ten days
and a 300 per cent increase over her previous bill.

On April 8, 17-year-old Victor Hugo Daza was shot thorough
the face and killed: The ultimate penalty for challenging Bechtel's
control of local water supplies. As protest leader Oscar Olivera
remarked in the aftermath of this needless tragedy, "The
blood spilled in Cochabamba carries the fingerprints of Bechtel."

Bechtel, seeking to pin the blame on anything but its own
irresponsible corporate venality, released a statement claiming
that "a number of other water, social and political issues
are the root causes of this civil unrest." Moving to shift
the blame, Bolivian government spokesman Ronald MacLean told reporters
the "subversive" protest was "absolutely politically
financed by narcotraffickers."

But the uprising had nothing to do with drugs: It was all
about water. And the real culprits are not narcotraffickers hiding
deep in la selva, but the well-groomed executives of the Bechtel
Corporation sitting smugly in their San Francisco Financial District
offices a hemisphere away.

Bechtel Speaks, We Respond

A series of editorials I wrote for several US papers triggered
a public response from Didier Quint, head of the Bechtel subsidiary
that oversaw the fiasco in Bolivia, in which he accused me of
misrepresenting the facts. I do not take accuracy lightly My reports
from Cochabamba were based on eyewitness accounts and extensive
interviews drawn from the center of the action, sometimes at significant
personal risk. Bechtel's response, written from far-off London,
was riddled with numerous, profound and documentable misstatements
of fact.

Quint's interpretations confirmed what Bolivian water-rights
protesters have been saying for months: The contract made with
Bolivia's government was a dud from the very beginning, a virtual
guarantee that thousands of poor families would be hit with water
rates they could not afford. Bechtel now complains bitterly about
that contract, but the fact remains that they negotiated it, signed
it and implemented it. It was in negotiations for that same contract
that Bechtel's companies demanded, and won, a provision guaranteeing
the company an average 16 percent annual return on its investment,
leaving Bolivia's poor to bear all the financial risk.

According to Quint, "Several wealthy interests paid poor
people to demonstrate against the concession." Apparently,
Quint's local contacts failed to relate that during the seven
days of protests, all highways in and out of Cochabamba were blocked,
with no ground transportation functioning. Many protesters traveled
by foot from rural communities, some from as far as 40 miles.
No mysterious unnamed interests paid them to do so - they came
to reclaim control of their water.

Quint claimed that the Coordinadora, the civic alliance that
led the protests, was composed of "people and organizations
having an interest in the parallel water market or being part
of the most affluent sector of the population." In fact,
the coalition is led by a union representing minimum wage factory
workers and including peasant farmers, environmentalists and youth.

Quint alleged that "opposition to the proposed new water
law also came from coca leaf growers... supported by their cocaine
connection." The best response to that comes from local taxi
driver Franz Pedrazas, whose water rates rose last January from
$10 per month to $20, an increase equal to more than what he earns
driving a cab for 12 hours. "I'm not a narcotrafficker,"
Pedrazas protested. "If I were, why I would I be driving
a cab? The farmers aren't narcotraffickers either."

Quint also claimed that "The typical rates for water
and sewage services rose 35 percent. Low-income residents were
to pay 10 percent more and the largest hikes (106 percent) were
reserved for the highest volume users, the most affluent."
After four months, I am still looking without success for someone
who had a rate hike of just 10 percent. Even among the poor, rate
increases of at least 100 percent were common and many people
suffered increases much higher. Local newspaper investigations
confirm the extreme rate hikes.

As did other journalists here in Bolivia, I attempted to reach
Bechtel's local representative, Geoffrey Thorpe, for his comments
during the seven days of the uprising. None of my calls was returned.
On several occasions, Thorpe is reported to have hung up on the
few journalists who did manage to reach him by telephone.

Cochabamba suffered four months of upheaval because of Becthel's
conduct. A 17-year-old boy is dead, two youths are blinded and
more than 100 others were injured. Those who opposed the water
privatization scheme had their homes ransacked and some were flown
off to a remote rainforest jail in an effort to silence them.
While the people of Cochabamba were having their blood spilled
on the streets, Quint's subordinates were busily removing the
water company computers and financial and personnel records. Bechtel's
fleeing administrators left behind emptied bank accounts and more
than $150,000 in unpaid bills. On top of all this suffering and
damage, Bechtel now has the audacity to demand a compensation
payment of $12 million from Bolivia.

If Bechtel wants to recover a shred of its decimated corporate
good will, it has got to stop spinning out misinformation and
disinformation. It must return what it has stolen, reconcile its
unpaid bills and withdraw its outrageous demands for $12 million
more from people who owe it nothing - not even a drink of water.